Coastal Energen commences power production at Tuticorin

Phase II expected to commence in nine months

Coastal Energen Pvt Ltd, backed by State Bank of India-led consortium, has commenced its first unit of 600 Mw in Tamil Nadu. The second unit with the same capacity would start operations in the next nine months, it said.

Foundation stone for the Rs 7,600-crore Mutiara thermal power project was laid in December 2009 in Thoothukudi district. After several hurdles and challenges, the project has started power supply to Tangedco, the power generation and distribution arm of the Tamil Nadu government, said Ahmed Buhari, founder president & CEO of Coastal Energen. The company has so far invested Rs 6,200 crore.

The unit was synchronised to the grid on September 7, 2014, and attained full load of 600 Mw on December 2. The power generated from this unit is tied up with Tangedco under a 15-year power purchase agreement. Tangedco will procure power for Rs 4.91 per Mw.

It will be importing coal from Indonesia for the project, said Buhari.

“The company will expand the power generation in the next 10 years to 5000 Mw,” he said, adding the challenge was funding. Considering the NPAs, issues relates to coal, banks are reluctant to fund power projects.

The company is also planning to rope in investors for future expansions.

“We are in talks with sovereign, wealth and PE funds to fund the future expansion.  At present, our debt equity ratio is 76:24 and targeting for 80:20,” said Buhari

The project is coming at a time when the power crisis is expected to increase in southern parts of the country, led by Tamil Nadu. The deficit is around 9,254 Mw  or -22 per cent in the southern region.

“We are seeing interest (to procure power) from the neighbouring states also,” said Buhari.